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April 13, 2006

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Reference ID Created Released Classification Origin
06KIEV1480 2006-04-13 17:41 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv
DE RUEHKV #1480/01 1031741
P 131741Z APR 06


C O N F I D E N T I A L SECTION 01 OF 03 KIEV 001480 



E.O. 12958: DECL: 04/13/2016 

Classified By: Ambassador for reasons 1.4 (b) and (d). 


1. (C) In an April 13 meeting with CODEL Frist, former Prime 
Minister Yuliya Tymoshenko averred that Ukraine's March 26 
elections showed the desire of the Ukrainian people for a 
renewed Orange coalition government.  Thanking Senator Frist 
for encouraging Team Orange reconciliation, Tymoshenko 
stressed that she sincerely wanted to work again with 
President Yushchenko; he still viewed her, though, as a 
"rival, not a partner."  Asked about prospects for an Orange 
coalition, Tymoshenko said she expected to sign a protocol 
about forming a majority coalition in three-way talks later 
that day.  A key question looking forward, Tymoshenko said, 
would be whether Yushchenko was prepared to appoint "only 
highly professional people" to key government posts (i.e., 
not her bitterest rivals from the Our Ukraine camp). 
Tymoshenko vigorously defended her record as prime minister, 
taking credit for the Kryvorizhstal privatization and 
dismissing her critics as "monsters of the old system." 
Tymoshenko argued that Ukraine would never be truly 
independent until it curbed its dependence on Russian energy 
supplies; the country needed to cut consumption, tap domestic 
gas reserves, make new deals with Central Asian suppliers, 
and diversify nuclear fuel sourcing.  She blasted the January 
4 gas agreement with Russia, calling it a "fundamental 
surrender" to Moscow that she would "like to rectify."  In 
exchanges with Senators Gregg and Burr, Tymoshenko said that 
she as prime minister would support granting more licenses to 
foreign banks, characterized the Ukrainian judicial system as 
"very weak," and asserted that combating corruption required 
more than "just lip service."  End summary. 


2. (C) Senate Majority Leader Bill Frist (R-TN), Senator Judd 
Gregg (R-NH), Senator Richard Burr (R-NC) and Ambassador, met 
April 13 with former (and leading candidate to be the next) 
Prime Minister Yuliya Tymoshenko.  Senator Frist 
congratulated Tymoshenko on Ukraine's recent democratic 
elections and on her political bloc's strong showing in the 
parliamentary (Rada) elections.  Senator Frist urged 
Tymoshenko to seek a way to achieve agreement on a Rada 
majority with her erstwhile Orange Revolution partners -- 
President Yushchenko's Our Ukraine and the Socialist Party. 
The Majority Leader said the U.S. supported a revived Orange 
coalition as the coalition that carried the strongest promise 
for the kind of political and economic reforms that the U.S. 

3. (SBU) Tymoshenko accepted Senator Frist's compliment 
regarding Ukraine's recent democratic elections, stressing 
that the Ukraine's March 26 parliamentary and local elections 
had been the most "free, democratic and transparent" 
elections in the country's post-independence history.  The 
Ukrainian people, she said, had expressed their desire to see 
an Orange coalition government.  Only an Orange team, she 
emphasized, would be able to "finish what we started on the 
Maidan."  A non-Orange coalition, Tymoshenko added, would 
change Ukraine's foreign and domestic policies for the worse. 

...Coalition Formation... 

4. (C) Thanking Senator Frist for expressing support for 
Orange rapprochement, and for steadfast American support of 
democracy in Ukraine, Tymoshenko related that she "sincerely" 
wanted to work again with President Yushchenko.  Their 
September 2005 falling out had been a "tragedy."  However, 
Tymoshenko said, the Ukrainian people had given them "another 
chance."  Tymoshenko had assured Yushchenko that she would 
support his re-election bid in 2009 and "not be his 
competitor."  She asserted, though, that Yushchenko still 
viewed her as a "rival, not a partner" -- a misperception 
that she hoped to correct.  Responding to a question from 
Ambassador, Tymoshenko said that at three-way coalition talks 
later in the day she would likely sign a protocol about 
forming a coalition government.  (Note:  News reports 
indicated the protocol would be signed late April 13 by 
Tymoshenko, Our Ukraine's Bezsmertny, and Socialist leader 

5. (SBU) In a dig at rivals in Our Ukraine, Tymoshenko said 
she hoped that Yushchenko would be prepared to accept "only 
highly professional people" in senior positions in the new 
government and not the people "who had failed to show such 
professionalism last time around."  She did not want to head 
a patchwork government that would "fail in six months" and 

KIEV 00001480  002 OF 003 

provide Yushchenko "with an excuse" to form a new coalition 
with  Yanukovych's Party of Regions.  Noting that the CODEL 
would see Yushchenko later in the morning, Tymoshenko asked 
Senator Frist to convey her "warmest regar

...Record as Prime Minister... 

6. (SBU) Senator Frist urged Tymoshenko, if she became Prime 
Minister, to do her best to improve Ukraine's business and 
investment climate.  In response, Tymoshenko stressed that 
she would do whatever she could.  She vigorously defended her 
record as premier, arguing that her government had annulled 
"5,000 regulations" that had hindered economic growth and 
facilitated corruption, reduced taxes on importers, and 
simplified import procedures.  Tymoshenko took credit for 
putting in motion Ukraine's first transparent, successful 
privatization of a large state enterprise, the Kryvorizhstal 
steel works.  In a jab at Yushchenko, she quipped that there 
had been "no others since then."  Tymoshenko emphasized that 
she "understands what it takes" to attract foreign 
investment.  She acknowledged that it was tough for foreign 
companies to do business in what she called Ukraine's 
"post-Soviet bureaucratic system built on corruption and 
criminal clans."  Tymoshenko added that she would meet on 
April 17 with the American Chamber of Commerce in Kiev. 

6. (SBU) Senator Frist advised Tymoshenko that the GOU should 
tread carefully in the area of reprivatization and adhere to 
market-based economic policies.  Tymoshenko replied that her 
alleged zeal for reprivatization and anti-market policies was 
overstated.  She joked that "only five percent" of what her 
detractors said should be taken seriously.  Charges that she 
was an economic populist who favored "excessive 
reprivatization" were "myths" made up by the "monsters of the 
old system" to curb her political power.  Tymoshenko stressed 
that she had been a businesswoman in the years following 
Ukraine's independence and knew that price-fixing was bad 
policy; "any sober person knows that the market should set 
prices," she said, adding that only courts -- and not the 
government -- should resolve property ownership disputes. 

...Energy Security... 

7. (C) Turning to energy issues, Tymoshenko asserted that 
Ukraine would "never be truly independent" unless it reduced 
its dependence on Russian energy supplies.  Russia attached 
"political conditions" to energy agreements that undermined 
Ukraine's sovereignty, she stressed.  Tymoshenko complained 
that 90 percent of Ukraine's oil refineries were 
Russian-owned, that 100 percent of Ukraine's nuclear power 
plant fuel was supplied by Russia, and that, in the wake of 
the January gas deal, Russia now supplied all of Ukraine's 
natural gas.  All of this, she groused, amounted to "energy 

8. (C) Tymoshenko said that Ukraine could curb its dependence 
on Russia, for example, by aggressively using conservation 
methods to cut consumption, tapping domestic gas reserves, 
forging new gas supply agreements with Turkmenistan, 
Uzbekistan and Kazakhstan, and diversifying nuclear fuel 
supplies (by working with U.S. companies like Westinghouse). 
Russia would not interfere with the transit of Central Asian 
gas to Ukraine, she smiled, "because Russian gas transits 
Ukraine" on the way to markets in Western Europe.  Tymoshenko 
blasted the January 4 gas deal, calling it a "fundamental 
surrender" to Moscow that she would "like to rectify."  All 
it would take, she asserted, "is the political will" to 
become energy independent; regrettably, she said, "political 
elites here" had deliberately opted for dependence on Russia. 

...Banks, Corruption and Judicial System... 

9. (SBU) Senator Gregg commended Ukraine for its recent 
successful exercise in democracy and urged Tymoshenko to work 
with like-minded pro-democracy forces to continue to 
strengthen Ukraine's democracy.  Senator Gregg said Ukraine, 
like any country, needed a strong banking system, a judicial 
system based on rule of law, and a tough approach to 
corruption if it wanted to attract foreign investment on a 
large scale.  In response, Tymoshenko stressed that: 

-- She as prime minister would support granting more licenses 
to foreign banks, though she acknowledged that there would be 
a powerful protectionist banking lobby in the next Rada; 

-- Ukraine's judicial system was "very weak" and badly in 
need of thorough reform; and, 

KIEV 00001480  003 OF 003 

-- Combating corruption was a matter of "political will," 
which needed more than "just lip service" from government 

...And Being a Female Politician in Ukraine 

10. (SBU) In response to a question from Secretary of the 
Senate Emily Reynolds, Tymoshenko commented that it was not 
easy for women to succeed in the tough world of Ukrainian 
politics.  Tymoshenko noted, for example, that she and many 
of her top lieutenants had spent time in prison (note: 
Tymoshenko was incarcerated for 41 days in 2001 in a 
tax-related investigation before being released without being 
formally charged).  Still, Tymoshenko said, women brought 
"love and inspiration" to the political process; she hoped to 
see more "strong women" in politics.  She asked Reynolds to 
convey her best regards to the female members of the U.S. 

11. (U) CODEL Frist did not have an opportunity to clear this 




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